[op-ed snap] Boardroom rot

Mains Paper 3 : Issues relating growth and development, employment |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : There is a need of overhauling corporate governance in India.


CONTEXT

Recent incidents of corporate misconduct raise questions about governance standards in India’s premium companies.

Background

  • Many of India’s listed firms have a ready template on how they conform to the highest standards of corporate governance.
  • That is increasingly becoming unconvincing as the corporate misconduct in some of the country’s top companies show and reflected lately in a series of ongoing stories on ICICI Bank on a “culture” of doing a deal “at any cost”, mistakes “made knowingly” and “suppressing” facts during the tenure of Chanda Kochhar as the bank’s managing director and CEO.

1.The past few months and 2018 were marked by governance failures or shortcomings in some of India’s top listed private banks, leading to the exit of CEOs in Axis Bank and ICICI, of course, and in firms such as Ranbaxy and IL&FS, besides the National Stock Exchange.

2. Professional Managers at the front of misconduct – Unlike earlier such episodes, a common thread, and a worrying one at that, in this new wave of misconduct is that almost all of them feature professional managers, and boards that allowed themselves to be overrun by powerful managements.

3. Opposed to earlier scams –

  • That’s in sharp contrast to the scenario over a decade and a half ago, when a string of corporate scams, including the accounting fudge at the erstwhile software services firm, Satyam, led to a shift in favour of professionally managed companies with attractive salaries and monetary incentives and a more diversified shareholding base.
  • This model, it was argued then, could better align all interests which could lead to maximisation of shareholder value.
  • Sadly, it is that belief which is now open to question as also the larger issue of ethical conduct and integrity underlying corporate governance in the country, both public and corporate.

Comparison with other countries

It is true that India is not an outlier when it comes to corporate scandals, looking around at what keeps unfolding in the US, Japan and some other countries.

1.Regulatory oversight is seen as deterrents – But unlike in India, huge fines or penalties, class-action suits, shareholder activism and regulatory oversight are often seen as deterrents in those countries.

2. Proactiveness on part of regulators – What’s encouraging, however, is the growing recourse by India’s regulators to claw back bonuses or stock options of executives found guilty of wrongdoing and easing them out.

Way forward

1. Tighter supervision and regulation –

  • That should be accompanied by tighter supervision and regulation and far greater oversight by boards of companies and drawing clear lines on their accountability.
  • The fact that just a handful of companies command a governance premium is a poor reflection of standards.

2. Improving Governance – India needs a huge leg-up on the governance front, not just for companies to raise capital, soak savings and boost the real economy, but also to dispel the unease about growing inequality and ensure that capitalism doesn’t get a bad name.

Corporate Social Responsibility: Issues & Development

[op-ed snap] GST buoyancy

Mains Paper 3 : issues relating to planning, mobilization of resources |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : GST

Mains level : Reasons for high GST inflows.


CONTEXT

The final month of financial year 2018-19 has given the government some reason for cheer. Targets for indirect tax collections may have been missed for the last year, but collections from the Goods and Services Tax in April for economic activity in March scaled a new high. The GST inflows of ₹1,13,865 crore in April are the highest recorded since the tax regime was introduced in July 2017.

Background

  • They represent an increase of over 10% compared to the same month a year ago, and over 15% buoyancy over the average monthly GST collections in 2018-19 of ₹98,114 crore.
  • To be clear, GST revenues have crossed the ₹1 lakh crore mark in March, January and October as well.
  • The government has acknowledged that economic growth did slow down in 2018-19, owing to declining private consumption growth, a tepid increase in fixed investments and muted exports.
  • The hope would be that the latest GST numbers are a harbinger of better growth momentum for 2019-20.
  • The growth rate of the economy fell from 8.2% in the first quarter to 7.1% in the second and 6.6% in the third, so any improvement in the final quarter numbers due at the end of May should provide some succour.
  • Healthier GST collections, if sustained, will also mean less pressure on the Centre to cover its fiscal deficit.

Reasons

1.Perplexing Trend – The April GST numbers have come as a surprise to many experts, given the lacklustre economic activity witnessed across many sectors in recent months, which should normally have impacted tax collections adversely.

2. Increasing Compliance –

  • This perplexing trend may be attributed to increasing compliance among businesses amidst the aggressive push by the tax authorities to widen the tax base.
  • GST filings, for instance, were the highest in March this year.
  • However, the April surge has occurred despite a decrease in the total number of GSTR-3B returns filed by businesses, from 75.95 lakh in March to 72.13 lakh in April.

3. Tax Rate Cuts – In the absence of more disaggregated data, it could be argued that tax rate cuts by the GST Council in December too may have spurred higher volumes for some goods and services.

4. March Rush – The rush to pay tax arrears at the end of the financial year may have been another seasonal factor contributing to better tax collection during the last month.

5.Enforcement Actions – Enforcement action by the taxman to collect more revenue from registered taxpayers who have not been filing returns could be yet another factor.

Way Forward

Simplification of GST

  • It is still too early to assume that this is the beginning of a secular trend. One must not lose sight of the need for further simplification of the GST regime once the election season is over.
  • A significant number of businesses have already been brought into the tax net since the advent of the GST.
  • In order to encourage greater compliance, there must be efforts to make it easier for small firms to remain in the tax net by cutting down the time and energy required to fill myriad tax returns.
Goods and Services Tax (GST)

[op-ed snap] Saving BSNL

Mains Paper 3 : Infrastructure: Energy, Ports, Roads, Airports, Railways Etc. |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : There is a need to revive BSNL to strenghten telecom Sector.


CONTEXT

The Centre must take immediate steps to revive Bharat Sanchar Nigam Ltd if it wants to achieve the objective of reaching 100 per cent tele-density in rural areas and keep telecom services affordable for the common man.

Need to revive BSNL

1. Counter to any monopolistic venture – While private operators have taken over the market with billions of dollars in investments and cost-efficient operations, India’s telecom consumers need a public sector entity like BSNL as an effective counter to any monopolistic venture that may arise due to the ongoing financial stress in the sector.

2.Less number of players – From as many as nine operators, intense competition and below-cost pricing have reduced the number to just three players.

3. The pressure to increase tariffs – The larger surviving operators, who have so far managed to sustain their operations, are under pressure to increase tariffs.

4. Fear of shut down of telecom networks – The highly leveraged balance sheets of these operators could also force them to slow down the rollout of next-generation data networks to rural and economically unviable areas.

5. Catering rural area – In this context, it is important to have a strong PSU telecom company which will not only prevent private players from increasing tariffs as an easy means to escape financial stress but also ensure that rural consumers are catered to.

Past Efforts to revive PSUs

  • There have been many attempts earlier to improve the company’s operations, but most of them remain on paper.
  • Sam Pitroda’s Committee – For example, a committee headed by Sam Pitroda, then advisor to the Prime Minister, offered a 15-point plan to turnaround the PSU, including trimming staff, divesting 30 per cent equity, adopting a managed services model for its various operations and inducting a chief executive from the private sector. This plan has not been acted upon.
  • Time is running out, though. BSNL has, in 14 years, moved from Navratna status to being declared as a sick PSU, with cumulative FY2009-18 EBIT losses of 82,000 crore.

Step Forward

To prevent any further erosion of value, the Centre must do three things.

1. Divestment – First, divest all the real estate land parcels owned by the company and invest the proceeds into buying all the technology BSNL needs to be at par with private players.

2. Implement Pitroda committee’s proposal – Second, implement the proposals of the Pitroda panel, especially those related to cutting down staff costs and hiving off various businesses into different verticals.

EXAMPLE – Here, the Centre can study how British Telecom, once a struggling PSU in the UK, was turned around.

3. Autonomy – Finally, remove all political interference and appoint a strong, independent management to run the company.

Conclusion

This will not only secure the future of BSNL, but also ensure that affordable digital services reach every nook and corner of the country.

Telecom and Postal Sector – Spectrum Allocation, Call Drops, Predatory Pricing, etc

M.N. Roy and his contribution for anti-colonial struggle in India

Mains Paper 1 : Modern Indian History |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : MN Roy and his contributions

Mains level : Role of Indians in Communism across India and the world


News

Context

  • The October Revolution in Russia (1917) ignited the spark of left wing ideology in India and other parts of the world.
  • By the second decade of the 20th century, the political thinking in India swung between Gandhian ideology and radical Communism.
  • This was so much that Bengali militant nationalist Manabendra Nath Roy became one of the founders of global Communism.

M. N. Roy

  • Having begun his political career at an early age, Roy first emerged as a powerful radical voice against the 1905 Partition of Bengal.
  • By 1915, as the WW I raged in Europe, he and several others were convinced that the only way of fighting the British in India was with German help.
  • Roy, who left India during this period to raise funds, soon found himself intimately involved in the growing Communist struggle across the world.

M. N. Roy in Mexico

  • When Roy set out from India in 1915, Mexico was nowhere on his itinerary. His destination was the Indonesian island of Java.
  • This trip turned out to be the prelude to many others, which took him to China, Japan as well as both coasts of the United States by late 1916.
  • In April 1917, when the US declared war on Germany, Indians implicated in the Indo-German conspiracy were under the spotlight along with their German backers.
  • Roy, like many other Indian revolutionaries, escaped America and moved south to Mexico.
  • In Mexico, he continued to organise revolutionary activities for India with the help of German diplomats.
  • As the success of the conspiratorial alliance with Germany appeared ever less likely, Roy began socializing with a group of North American Leftists.

Spread of Communism in America 

  • Under the influence of the Bolshevik revolution that had broken out in 1917, Roy along with the American Leftists and Mexican unionists and anarchists founded the Mexican Communist Party (PCM) in November 1917.
  • The PCM was one of the first legitimate Communist parties to be established outside Russia and played an important role in organising the workers’ movement in Mexico.
  • With the founding of the PCM, Roy’s name came to be associated with the expansion of Communism globally.
  • He and his party were invited by head of the Soviet Union Vladimir Lenin to be part of the Communist International’s Congress.
  • Roy helped Lenin develop the Communist International’s — also known as Third International — policies towards the colonies.

Contribution in anti-colonial struggle in India

  • Roy’s conversion from an Indian nationalist financed by the Germans to an international revolutionary thus occured in Mexico.
  • However, he continued to be focused on the anti-colonial struggle in India.
  • In 1922, he prepared a detailed programme for the consideration of Indian National Congress. In this he proposed nationalization of railways, mines, water ways.
  • He also suggested that the aim of the Congress party should be complete national independence from British domination.
  • He established CPI in Tashkent in 1925.
History- Important places, persons in news

SC view on foreigner’s detention defies constitutional obligations

Mains Paper 1 : Population & Associated Issues |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : NRC

Mains level : Issues over NRC


News

  • CJI in a statement had ordered greater detention of suspected foreigners in Assam.
  • The Commonwealth Human Rights Initiative (CHRI) has said the apex court’s remark was unfortunate and flies in the face of India’s constitutional and international obligations.

Statelessness cited by CHRI

  • CHRI argued that accounts from Assam indicate “arbitrariness and not rule of law” is often used to define those who came post 1971 from Bangladesh — of whatever religious denomination — and those who are Indian nationals.
  • Lakhs are in limbo and now fear that they may become “stateless” because of a process that is mired in a mix of complexity, confusion, lack of precision and prejudice.
  • The Supreme Court needs to reaffirm India’s constitutional and international obligations to rights on complex issues of nationality, detention and deportation and not be unmindful of its own commitment to these duties.

Inability to deport

  • CHRI referred to Article 21 which that no person in India can be deprived of her/his right to life and liberty without due process.
  • There is no deportation agreement with Bangladesh.
  • International law lays down that such deportations can take place only with the consent of the country of origin.
  • Bangladesh has consistently refused to accept that its citizens migrate in large numbers to India.
  • Indeed, Bangladesh regards such unilateral efforts as harmful to a bilateral relationship that is critical for the security and stability of both countries and especially of our eastern region.

What India cannot do?

  • We cannot place ourselves in a situation where we are seen as forcing people out at gunpoint; it would be ethically unjust, wrong in law and draw international condemnation.
  • Any method used must be undertaken within the rule of law frame, be just and fair and designed to minimize individual hardship and tragedy.
  • This is a tragedy of growing intensity which is gathering momentum as a result of the current National Register of Citizens (NRC) exercise in Assam.
  • Many of those at risk of being marked foreigners were from the bottom of the economic pyramid, unable to sustain the complex adjudication process needed to establish their citizenship.

Way Forward

  • Inability to address this critical situation adequately and justly would be seen internationally as a gross violation of human rights and a blot on India’s traditional record.
  • The social fault lines could be exacerbated by insensitive handling that could leave many people desperate, particularly youth, with the potential of radicalization.
  • The Court needs to reaffirm India’s constitutional and international obligations to rights on complex issues of nationality, detention and deportation and not be unmindful of its own commitment to these duties.
Citizenship and Related Issues

Ross Ice Shelf

Mains Paper 1 : Climatic Change |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Ross Ice Shelf

Mains level : Consequences of climate change


News

  • Antarctica’s Ross Ice Shelf, the world’s largest ice shelf roughly the size of France is melting rapidly.

Ross Ice Shelf

  • An international team of scientists has found out that this ice shelf is melting 10 times faster than the overall average, due to solar heating of the surrounding ocean surface.
  • The melting ice shelf has led to global sea-level rise of around 13.8mm over the last 40 years.
  • Solar heating of the surrounding ocean surface spurred the rate at which the ice is melting.
  • Using instruments deployed through a 260 metre-deep borehole, the team measured temperature, salinity, melt rates and ocean currents in the cavity under the ice.
  • Earlier, scientists believed that heat radiating to the bottom melted the underside of the shelf, while the ocean surface cooled down quickly.
  • However, the latest findings show that heat in the ocean surface plays a crucial role.

Why is it alarming?

  • Antarctica comprises 90 per cent of the world’s ice.
  • The Ross Ice Shelf is the largest ice shelf of Antarctica (as of 2013 an area of roughly 500,809 square kilometres and about 800 kilometres across: about the size of France)
  • If this situation continues, sea-levels would rise up to 60 metres by 2050 — and the ocean would engulf coastal cities across the globe.
Climate Change Impact on India and World – International Reports, Key Observations, etc.

ISRO plans to launch radar imaging satellite in May

Mains Paper 3 : Awareness In The Fields Of It, Space, Computers, Robotics, Nano-Technology, Bio-Technology |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : RISAT

Mains level : Significance of the RISAT Mission


News

  • India is planning to launch its radar imaging satellite RISAT 2BR1 sometime towards the end of this May on one of the variants of its Polar Satellite Launch Vehicle (PSLV) rocket.

RISAT 2BR1

  • The RISAT was first deployed in orbit on April 20, 2009 as the RISAT-2.
  • It uses synthetic aperture radars (SAR) to provide Indian forces with all-weather surveillance and observation, which are crucial to notice any potential threat or malicious activity around the nation’s borders.
  • Following the 2008 Mumbai terror attacks, the launch of RISAT-2 was prioritized over RISAT- 1, as its C-band SAR radar was not yet ready and RISAT -2 hence carried Israeli-built X-band radar.
  • The to-be-deployed RISAT-2BR1 satellite uses the same SAR band and will further improve India’s imaging reconnaissance abilities.
  • The rocket that would carry RISAT 2BR1 is designated as PSLV-C46 as per ISRO’s numbering system and will blast off from the first launch pad at the country’s rocket port in Sriharikota.
  • Following the launch of RISAT 2BR1, ISRO will send up a cartography satellite Catosat-3.
ISRO Missions and Discoveries